Profitability outlook for SMEs unveiled

SMEs surveyed in the first quarter of FY17 have revealed their expectations for the profitability of their business and their personal earning capacity.

Contrary to speculation about the health of Australia’s economy and the government unveiling a blowout in its deficit, the majority of SMEs surveyed by Momentum Intelligence appear to be upbeat about their earnings prospects at present.

Revenues

For the most part, SMEs are optimistic of having increased their revenues as we transition into the new year, with 71 per cent of respondents expecting higher revenues. And for two-thirds of respondents, this higher revenue coming into the business will also translate into higher profits.

Just over half (55 per cent) of business owners said this higher profitability, rather than be reinvested into the business, would enable them to boost their own incomes. A further 33 per cent expected their personal income to remain relatively stable.

Hiring intentions

Interestingly, this growth in profitability is not expected to translate into higher staffing levels. According to the survey, three-quarters (74 per cent) of business owners said they are not looking to recruit at all.

“There's probably a number of reasons for that,” explains Andy Scott, head of research at Momentum Intelligence.

“The period of year that we're coming into, we've talked about some uncertainty globally, but obviously with peoples' attitudes towards how the government is doing with the economy … there's not a lot of confidence from business owners that the government are doing the right thing and are going to help them support that.

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“In times of uncertainty, to suddenly load up your cost base with employees, is not necessarily the wisest thing to go about and do. It doesn't surprise me to see that reflected in this data.”